Correlation Between UBS ETRACS and Innovator ETFs

Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and Innovator ETFs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining UBS ETRACS and Innovator ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UBS ETRACS and Innovator ETFs Trust, you can compare the effects of market volatilities on UBS ETRACS and Innovator ETFs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in UBS ETRACS with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Innovator ETFs.

Diversification Opportunities for UBS ETRACS and Innovator ETFs

-0.66

Correlation Coefficient

UBS ETRACS  Innovator ETFs

Excellent diversification

The 3 months correlation between UBS and Innovator is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust and UBS ETRACS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on UBS ETRACS are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Innovator ETFs go up and down completely randomly.

Pair Corralation between UBS ETRACS and Innovator ETFs

Given the investment horizon of 90 days UBS ETRACS is expected to under-perform the Innovator ETFs. In addition to that, UBS ETRACS is 3.93 times more volatile than Innovator ETFs Trust. It trades about -0.04 of its total potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.23 per unit of volatility. If you would invest  3,576  in Innovator ETFs Trust on September 4, 2024 and sell it today you would earn a total of  512.00  from holding Innovator ETFs Trust or generate 14.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

UBS ETRACS   vs.  Innovator ETFs Trust

UBS ETRACS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS ETRACS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Innovator ETFs Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Innovator ETFs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UBS ETRACS and Innovator ETFs

The main advantage of trading using opposite UBS ETRACS and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, Innovator ETFs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Innovator ETFs will offset losses from the drop in Innovator ETFs' long position.

The idea behind UBS ETRACS and Innovator ETFs Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.